City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-00326 2/27/2024 Consent Item 2.
Adding Ramirez & Co., Inc. to the City’s Pool of Bond Underwriters File ID: 2024-00326
Location: Citywide
Recommendation: Adopt a Resolution: 1) approving an amended pool of firms qualified to provide bond underwriting services to the City through fiscal year 2026/27; and 2) authorizing the City Treasurer to select firms from the pool as needed to participate on City financing projects.
Contact: Claudia Lara, Debt Analyst, (916) 808-2267, [email protected]; Brian Wong, Debt Manager, (916) 808-5811, [email protected], Office of the City Treasurer Presenter: None.
Attachments:
1-Description/Analysis
2-Resolution
Description/Analysis
Issue Detail: On several occasions in the past, the City Council has authorized the City Treasurer to establish a “pool” to provide bond underwriting services to the City during a five-year period, and the City Treasurer, at their discretion, has selected firms from the pool to underwrite the City’s bond financings.
The current pool was established in September 2022 and is set to expire on June 30, 2027. The Office of the City Treasurer recommends adding Ramirez and Co., Inc. to the current pool of underwriters. Ramirez and Co., Inc. is an established firm with expertise in land secured bonds, general fund bonds and taxable bonds targeting both institutional and retail investors.
Policy Considerations: Establishing and maintaining a pool for bond underwriters to provide services during a specified period is a typical practice of cities and other local governmental agencies that issue debt in the municipal bond market, and the State of California also has a large pool of firms that provide bond underwriting services. Additionally, it is a best practice of the Government Finance Officers Association to select bond underwriters for negotiated debt financings via a request for proposals or request for qualifications process. The practice provides staff with immediate access to
File ID: 2024-00326 2/27/2024 Consent Item 2.
specialized expertise, maintains continuity for City projects, and ensures competitive exposure and access to the financial markets (bond financing market and investors).
Economic Impacts: None.
Environmental Considerations:
California Environmental Quality Act (CEQA): Not applicable, the recommendation does not constitute a “project” and is therefore exempt from the California environmental Quality Act (CEQA).
CEQA Guideline section 15378(b)(2).
Sustainability: Not applicable.
Commission/Committee Action: None.
Rationale for Recommendation: Maintaining a pool of bond underwriting firms allows the City to take advantage of the firms’ combined financing expertise, marketing and distribution strengths, and financial strength. Adding Ramirez and Co., Inc to the current pool of underwriters further enhances the pool of underwriters for the City due to their expertise in land secured bonds, general fund bonds and taxable bonds, as well as their ability and demonstrated willingness to commit significant levels of capital to enable the successful completion of bond pricings.
Financial Considerations: There are no budget implications associated with the recommendation.
Compensation for underwriters is negotiated at the time of each financing and is contingent upon the sale of bonds.
Local Business Enterprise (LBE): Not applicable.
Background: On several occasions in the past, Council has authorized the City Treasurer to establish a pool of bond underwriters eligible to provide financial expertise and services to the City for its debt-financing needs. The current pool was established in September 2022 and is set to expire on June 30, 2027. The Office of the City Treasurer recommends the amended pool consist of the following firms (in alphabetical order):
- BofA Securities, Inc.
- Goldman Sachs & Co. LLC
- Morgan Stanley & Co. LLC
- Piper Sandler & Co.
- Ramirez & Co., Inc. [ADDED]
- Raymond James & Associates, Inc.
- Siebert Williams Shank & Co., LLC
- Stifel, Nicolaus & Company, Inc.
File ID: 2024-00326 2/27/2024 Consent Item 2.
The City Treasurer will select firms from the pool on an as-needed basis to perform underwriting services. A firm’s inclusion in the pool does not guarantee that it will be selected to serve on a financing. Establishing a pool of firms eligible to provide underwriting or investment-banking services during a three-year period meets several objectives of the City:
- It enables the City to periodically evaluate and identify its financing needs and determine which firms can best meet these needs.
- It allows the City to evaluate changes in the industry and the capabilities of firms to adapt to these changes.
- It sizes the pool relative to the anticipated volume and type of debt to be used over the five- year term; although firms are included in the pool their participation in any financing is not guaranteed.
- It provides incentives and continuity on long-term complex projects. - It provides expertise in certain credit types that the City may not be as familiar with issuing.
RESOLUTION NO. 2024-XXXX
Adopted by the Sacramento City Council
February 27, 2024
THE CITY’S AMENDED POOL OF BOND UNDERWRITERS FOR FISCAL YEARS 2022/23 THROUGH 2026/27
BACKGROUND
A. On several occasions in the past, the City Council has authorized the City Treasurer to establish a pool of bond underwriters to provide underwriting services to the City for its debt- financing needs. The current pool was established in September 2022, and is set to expire on June 30, 2027.
B. The City Treasurer desires to amend the current pool to provide underwriting services for the City’s debt-financing needs for fiscal year 2022/23 through fiscal year 2026/27 to add Ramirez & Co., Inc. (Ramirez). Ramirez may provide the City with expertise in land secured bonds, general fund bonds and taxable bonds.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The City Treasurer’s recommendation to amend the pool of bond underwriters eligible to provide the City with underwriting services for fiscal year 2022/23 through fiscal year 2026/27 is hereby approved, with the pool consisting of the following eight firms: BofA Securities, Inc., Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, Piper Sandler & Co., Ramirez & Co., Inc., Raymond James & Associates, Inc., Siebert Williams Shank & Co., LLC, and Stifel, Nicolaus & Company, Inc.
Section 2. For each new financing or refinancing project that may commence between fiscal year 2022/23 through fiscal year 2026/27, the City Treasurer is authorized, at their discretion and in their judgment, to select from the pool the bond underwriting firm or firms to provide bond underwriting services for that project.